Census Bureau housing data is prone to error, revisions, and re-revisions. At best, it's a directional indicator, but even in that role it can fail.

Why this matters is that the accuracy, or lack thereof, of current housing activity impacts a very important dimension of how the residential for-sale market works, forward investment in land.

The smart money takes Census data with more than a grain of salt, looks instead more closely at actual transactional permit and starts data, counts builders' starts in the field in the subdivisions, and calculates plus or minus what's really happening vs. what federal government surveys capture.

BUILDER sibling Metrostudy looks at Census data on starts, building permits, and new home sales, just like everybody else, but there are two differences on how Metrostudy calculates activity in the market. One is timing--the Metrostudy data is coming in real-time from the thousands of subdivisions its researchers are driving daily, and from real-time title data--and the other is the source of the data, which is absolute counts on the ground rather than sample-based formulas the Census uses.

Another housing data source who's carefully studied the variances between Census Bureau housing trends and actual activity levels is Zelman & Associates, whose measures derive from an extensive monthly survey of scores of builders who report starts and sales data, an accruing knowledge base that takes a more reliable pulse on housing activity than the Census.

This past month, Zelman's data is dramatically and even directionally different than that of the government research agencies. A piece from The Z Report, "Single-Family New Construction Trends Better than the Government is Telling You," notes that government data reflect a weakening single-digit growth trend in 1Q17 vs. 4Q16. Zelman's data, on the other hand, indicates strong double-digit 1Q17 growth.

"We believe that it is fair to conclude that national new home order activity has maintained a low double-digit growth pace in the early part of 2017, comparing favorably to an already-strong fourth quarter trend. This is in spite of higher mortgage rates that typically undermine short-term momentum, speaking to the empowering effect of stronger consumer confidence that is combining with favorable household formation and limited vacant inventory across the new construction and existing home markets."

The reason we're calling attention to these different readings in the data is that if the market is running hotter than the government prints say it is, it could have at least two strongly negative impacts that could stop momentum in its tracks.

One is that construction activity and orders will start again stressing labor capacity constraints, extending start-to-completion cycles, degrading customers' buying experience, and, possibly leading to quality issues.

Two is that builders will burn through their lot supplies at a faster than usual pace, forcing them back out into a land buying market where prices are high and the ability to pencil profitable deals--without writing in escalators on home appreciation--becomes more and more difficult.

The issue is, there's risk in managing to a false read on the market, whether it's underestimating its strength or not copping to actual signs of weakness. The good news is, there are remedies.

One, perhaps, is to become a subscriber to The Z Report, which is a twice-monthly package of original, exclusive data and analysis from the team at Zelman & Associates. You can try it out for free by linking here.

Too, for real and real-time actual data on exactly what the activity is in your market or markets, Metrostudy is the go-to source.

What's more, both Zelman and Metrostudy will be with us at our upcoming Housing Leadership Summit, May 8-10, at the Ritz Carlton, Laguna Niguel, as part of our program and our networking opportunities. You can go to our registration site here.